Capital

RAJAR Q2 2015

RAJAR Q4 2013

This post is brought to you in association with RALF from DP Software and Services. I’ve used RALF for the past 8 years, and it’s my favourite RAJAR analysis tool. So I’m delighted to be able to bring you this analysis. For more details on RALF, contact Deryck Pritchard via this link or phone 07545 425677.

The first thing to say is that this has been a good quarter for radio as a whole. Overall reach is back to 90%, and listening hours have increased too, with the average radio listener listening for 21.7 hours a week – the highest in a couple of years.

Commercial radio is likely to be pleased too, since it has gained back a little from the BBC, with 44.4% of listening being commercial (up from 42.8% last quarter), compared with 53.0% to the BBC (down from 54.4% last quarter). Commercial has gained too, compared with this time last year.

And because it’s always keenly watched, the number of people who listen via a digital platform at least some point during the week has grown to over 60% of the population for the first time (61.1% up from 59.8% last quarter). The amount of listening via those platforms has also grown – up to 39.9% of all listening.

Let’s look in a bit more detail at the performances of some of the key players.

National Stations

Radio 1 has notably bounced back since last quarter’s results. Indeed those previous numbers do now look a little of an aberration, and are a reminder that nobody should ever judge a station’s figures on the basis of a single RAJAR period. The station’s reach has increased by 7.6% and is back over 10 million, while hours have increased by 3.3% on the previous quarter. It’s true that they’re still down on the previous year, but I think they’d take these numbers.

Radio 2 has also improved from last quarter a fraction – but you would probably argue it’s results are flat. Still not bad for the biggest station in the UK/Europe/World/Universe (Delete as applicable).

Radio 3 has dropped below 2m again, although it’ll undoubtedly return next quarter (Proms), but its listening hours are up nearly 5% (and enormously on the previous year).

Here’s an interesting question: who do you think has the higher average age? Radio 3 or Radio 4?

In fact, the average age of a Radio 3 listener is 57, and that of a Radio 4 listener is 56. The variability of those averages is probably quite different however.

Radio 4 fell marginally this quarter, although it’s up on the previous year and still reaches 10.6m people a week.

Five Live is still clearly finding its feet following all its schedule changes, and is back down this quarter – 7.6% down in reach, but only 2.4% down in hours. That does leave it well down on the previous year however. And there’s not really a big summer of sport to help get things straightened out, so it’ll be worth watching.

Classic FM will be disappointed with its results. It’s reach and hours are both down on the quarter and the year, with reach in particular at an all time low under the current RAJAR methodology (so since 1999). It still reaches nearly 5.3m people, but it’s something to keep an eye on. There can be a bitter war of words between it and Radio 3, when they think the latter is dumbing down to appeal to Classic FM’s audience. But Classic FM’s audience is 2.5x Radio 3’s, and as we’ve established, Radio 3’s audience fell this quarter too.

Talksport will also be disappointed by this set of results, which include the end of the football season. Both reach and hours are down on the previous quarter, and over 10% down on the previous year. It’s reach still hovers above 3m, while hours are above 20m. It’ll be hoping that the forthcoming sister services which are due to launch next year on D2 will help grow a “Talk” network.

Meanwhile the main Absolute Radio station has seen its reach stay flat while hours have grown – quite substantially on the year. With the station due to take over the West Midlands FM licence currently used to broadcast Planet Rock, it should mean some further growth in the coming quarters (although such format switches always take time to bed in locally).

National Digital Stations

Overall Bauer has had a very good quarter with several of its brands achieving record audiences.

The Absolute Radio Network now reaches a record high of 4.04m people a week with just less than 32m hours. And that’s without including Planet Rock’s figures with which it is bundled when sold. That comes off the back of yet more growth on Absolute 80s which jumped another 10.7% in reach on the previous quarter, and much more on the previous year. At 1.6m reach, it’s getting ever closer to the 2.0m that the main brand gets. (I remain uncertain as to the plan to move Absolute 80s off D1 and onto D2 at launch, since the lower reach of the new multiplex must surely effect these numbers negatively. We’ll have to wait and see).

The Kiss Network has also achieved some great growth with over 5m reach and 30.5m hours – both records. These are helped especially by some very significant improvements in Kisstory which has seen nearly a 30% increase in reach and a more than 40m increase in hours. And Kisstory has yet to launch properly nationally on DAB, currently only appearing on a series on local DAB multiplexes.

The nascent Magic Network also did well. It too has a sister station due with D2.

Global Radio has perhaps more of a mixed bag this quarter.

The Capital Brand has increased in reach and hours this quarter – a modest 1.9% in reach, but a more chunky 9.7% in hours. But both are down on the previous year.

Heart is more disappointing. Overall it’s down 1.4% in reach and 6.8% in hours, with both measures down on the year too. It’s also not clear when the previously announced Heart Extra is likely to launch which might help prop up the brand a little. It was announced in December last year, but the presumed spot on the D1 multiplex was retained by Premier Christian Radio after negotiations with multiplex operator (Premier has signed up until 2028 according to reports).

Smooth has also shown some disappointing results this quarter, down in reach and hours, although not as bad on the year. While Xfm is flat in reach, but down further in hours – another 7% down on the quarter and 12% down on the year. The radio industry is currently awash with rumours that Chris Moyles is going to Xfm, which may even get a full rebrand and relaunch. We’ll have to see.

LBC has had some very strong results, with its reach up strongly on both the quarter and the year. The station is now showing some real growth since it went national towards the start of last year. We could be in for some interesting battles between LBC and Talkradio once it launches.

It feels like every quarter that I report that 6 Music has had a record reach. Well it hasn’t this quarter – it’s actually down by a paltry 9,000 listeners. But it’s had record hours. With its listeners spending 9.1 hours a week, this is not an “additional” station, this is very much a main station for those 2m people.

1Xtra has had a strong quarter, up a lot in reach (14.2%) and an enormous amount in listening hours (47%). This probably reflects a bit of freak set of results last quarter as much as anything though.

Radio 4 Extra had extraordinarily high results last quarter, so perhaps unsurprisingly it has fallen – back below 2m listeners. It is still well up on the previous year though (+25% in reach and +37% in hours), so I’d say that it’s still a confidently growing station.

And it’s been a very strong result for 5 Live Sports Extra – even in a period before The Ashes began (although there was other cricket). Reach is up 21% and hours are up nearly 50%! Even though this represents a record high reach, I would expect both figures to increase further with the current Ashes campaign driving them.

Finally, since it’s very close to home for me now, I should report that listening to the BBC World Service is up very a very solid 14% in reach on the quarter and a similar amount on the year. Hours are a more modest 3% up.

London Stations

While I’m sure some readers think that London radio gets too much attention paid to it, I always think as much as anything it’s worth paying to attention to because it’s proved a good indicator of where radio is heading in the UK as a whole. It’s obviously of key importance to agencies buying advertising on commercial stations as well.

The figures this quarter show that all radio listening is at 89% (up from 86%) which compares well with 90% overall. What that means is that although Spotify, Apple Music and everyone else is fighting it out for supremacy, it’s not had a massive impact on radio… at least not yet. Indeed radio listening in London is up 9.4% on the previous quarter too, with radio listeners in London spending an average of 20.5 hours listening to the radio every week. So perhaps last quarter’s numbers were a one-off?

Interestingly, most of that growth this quarter has come from commercial radio with the BBC broadly flat in reach, and up 2.8% in hours. It’s also worth pointing out that in London, unlike nationally, commercial radio is more listened to than the BBC, with 51.0% of listening compared with the BBC’s 45.6%.

That all said, Radio 4 remains the most listened to station in the capital, but you’re really interested in the battle between the commercial stations aren’t you?

I think the big London news is that Global has had a great quarter. Capital has scored its highest reach in quite a while, jumping 22.7%. And it’s hours are also up 20.7%. That gives Capital the number one commercial spot in London, as it just beats Kiss. The 80,000 difference between the two is about the number of people who get to go to Capital’s Summertime Ball! Its sister brand Capital Xtra has also done well – up to such a great extent, that we know that last quarter’s data probably shouldn’t even be looked at.

Heart too seems to be back from a recent slump, jumping nearly 30% in reach to close to 2m. Hours growth is more modest, but it’s back over 10m.

Meanwhile it turns out that Xfm isn’t dead in London, and Smooth too is turning it around.

LBC is again a strong performer, and its listening hours shouldn’t be underestimated – it’s number two in London under that measure.

But number one in hours is Bauer’s Kiss which has also had a very strong reach performance jumping to 2.12m – its highest ever. It’s hours were up 26% on the quarter and reach up 12.6%. With Magic putting in some solid growth in reach and hours, only Absolute Radio’s London performance will have disappointed them a little (down in reach and hours on the quarter although up on the year).

Breakfast

I’m not going to dwell long on this and just consider Radio 1 and Radio 2, since both presenters have some interesting new TV jobs coming up and it’ll be worth seeing whether it makes any difference to their ratings over the coming months.

Nick Grimshaw takes on co-presenting duties of The X-Factor later this month, and this quarter has seen his reach increase by 6.2% to 5.8m. While Chris Moyles has previously had in excess of 7m listeners for the Radio 1 breakfast show, we’ve not seen numbers like that since the start of 2012. The other thing to watch here would be any kind of “Moyles effect” should he show up on Xfm, and should Xfm be given a significant marketing budget and be made available nationally on DAB. Lots of ifs there. And it’s been a while since Moyles was on the radio, so where are those listeners now? Nothing is certain.

Meanwhile Chris Evans on Radio 2 has also had a decent set of results with increase in reach and hours. While neither are quite records, you’d have to go back to the start of 2012 to find the last time listeners spent so much time with Radio 2’s breakfast show. Evans of course, is taking over Top Gear from next year. And there’s also another run of TFI Friday planned. Can he keep all this up and his Radio 2 show? We’ll have to see.

No bubbles this quarter I’m afraid. Hopefully they’ll be back next time.

But instead, I thought I’d show you some audience overlap figures between some station pairings. Broadly speaking radio listeners hear fewer stations than TV viewers watch stations. But there are overlaps between services, and it’s always worth having a look to see who listens to otherwise similar stations – and who doesn’t.

Radio 1 v Capital Network

R1Capital

So just to explain this chart, it means that 2.4m people listen to both Radio 1 and Capital, while 7.6m Radio 1 listeners never listen to Capital, and 4.7m Capital listeners never listen to Radio 1 (At least across a single week).

Radio 2 v Heart (Network)

R2Heart

Radio 3 v Classic FM

R3Classic

Five Live v Talksport

FiveTalk

Radio 1 v Radio 3

Well – there was a Radio 1 Prom this year!

R1R3

NB. These charts are not necessarily quite to scale – I “hand” drew them in Photoshop.

Further Reading

For more RAJAR analysis, I’d recommend the following sites:

The official RAJAR site and their infographic probably here
Radio Today for a digest of all the main news
Go to Media.Info for lots of numbers and charts
Paul Easton for analysis including London
Matt Deegan usually has some analysis
Media Guardian for more news and coverage
The BBC Mediacentre for BBC Radio stats and findings
Sadly the One Golden Square blog seems to have died, but you could try Bauer Media’s site.
And it’s entirely likely you’ll find Global Radio here.

Source: RAJAR/Ipsos-MORI/RSMB, period ending 28 June 2015, Adults 15+. One other thing to note is that RAJAR updates its population estimates in Q2 each year, so we’ve seen the UK adult population grow slightly this quarter, although only by 1.3% nationally.

Disclaimer: These are my views alone and do not represent those of anyone else, including my employer. Any errors (I hope there aren’t any!) are mine alone. Drop me a note if you want clarifications on anything. Access to the RAJAR data is via RALF from DP Software as mentioned at the top of this post.

How Much Does An Artist Earn From The Radio?

Change

There’s a widely linked article recently published in Wired about a track that has been played 168m times on Pandora earning its writer only $4,000.

Now the first thing to note is that this number has been diluted a bit because there were three song writers and a publisher involved. The track overall paid $12,359. Still marginal, and representing just 0.0074 cents a play! And the second thing to note – which I’ll return to – is that $12,359 isn’t the full amount that Pandora payed out for this track. There are performance fees on top.

But it’s for stories such as this, that I wonder about the economics of streaming services in general. It is reported that companies like Spotify may well be paying 70-80% of their revenues to the copyright holders, but when these kind of paltry amounts are shown, some broader calculations need to be done.

I’m particularly interested in the extent to which increased streaming revenues make up for decreased “permanent downloads” (e.g. iTunes sales) and physical sales. In the US, the decline in permanent downloads is being made up in streaming revenues according to the RIAA. But there are still question marks across the industry, particularly when the download services tend to profitable, while the streaming services tend to still be losing money.

Some discussions on Facebook had me wondering about just how well UK radio compares to, say, Pandora in this instance.

So let’s do some back-of-a-fag-packet calculations.

I’m going to use publicly available data, and I’m going to have to make some assumptions.

First of all, you need to know how UK radio stations pay for the music they play. Well they deal with two collection organisations:

PRS For Music – who collect on behalf of the writers and publishers; and
PPL – who collect on behalf of the record companies and performers.

See Wikipedia for a bit more detail on the differences between those organisations. But what you need to know is that in the UK, unless you have some kind of direct deal, you’re going to have to deal with both of these organisations if you want to licence music. That’s certainly the case for radio.

[NB. In the US, it’s a bit different for their broadcast radio services, and effectively the performers don’t get paid for radio plays under a ruling which assumes artists benefit from the exposure airplay gives them.]

In the UK, as well as commercial radio, we also have BBC radio. But because commercial radio is paid for on the basis of a percentage of the amount it earns, the agreement the BBC has to come to with these collection organisations will be somewhat different. It’s almost certainly a confidential agreement. But what you should know is that the collection organisations can’t show undue favour to different groups. So there’ll be some kind of parity between the BBC and commercial radio (probably made even more opaque because the BBC has television services as well, that also use music).

So back to UK commercial radio.

As I mentioned, the cost of playing music to a UK commercial station is calculated as a percentage of the money the station earns in advertising. There’s a sliding scale depending on whether the station is a speech station or music station. Yes – speech stations do use music – just much less, so they pay less. The scale also takes into account the size of the station. The bigger and more successful you are, the higher the percentage.

The current costs to a biggish commercial station that delivers a decent amount of revenue (more than around £1.4m a year) are:

PRS for Music 5.25%
PPL 5%

To be clear, these are the costs for a commercial music station being broadcast on FM/DAB. If you’re a satellite operator, it might be different, and if you’re an internet-only station, it’ll be very different and calculated on a different basis. This also assumes that all you’re doing is playing the music. Additional rights to reuse music, incur additional costs.

In other words, 10.25% of a station’s Net Broadcast Revenue (NBR) – the money it generates – is handed over. There are details about what money is and isn’t included in the NBR (non-broadcast related revenues that a station might bring in from ticket sales for example), but for simplicity’s sake, we’ll assume that all commercial advertising, including sponsorship and promotions, are included in this figure.

It’s also important to know that stations have to provide “returns” to the copyright bodies, telling them what they’ve played. That’s because the copyright bodies allocate station revenues according to which artists are played. The more an artist is played, the more they get paid.

Now comes the tricky bit. To calculate how much an artist earns from radio play for her single on a station, we also need to know how much commercial revenue that station delivers annually. And that’s not something that you can easily find out.

I can look at Talksport’s earnings because it’s owner, UTV, is publicly listed, and they break that station out (£29.5m in 2013). But since that’s a speech station, that’s not a fair comparison. Global and Bauer are privately owned and the details that they publish in their filings with Companies House are much more limited.

Nonetheless, I think Capital London might be a good test case even if I have to use some estimates in my numbers.

The last report that Global Radio published said that as a group it delivered £220m of revenue.

But it gets messy with the purchase and then sale of some GMG stations, as well as this period including the selling of national airtime for Orion (the contract for which has recently changed to Bauer Radio).

So I’m going to estimate that Capital London earns about £20m a year.

Capital London accounts for about 2.5% of all commercial radio listening. And the commercial radio sector was last year worth about £454m which would give it a “fair share” of about £11m. But that’s low, since it’s in London where revenues are higher, and Capital is a premium brand.

So I’ll stick with my £20m estimate and heavily caveat it. I could easily be off by several million in either direction.

That means that Global Radio probably has to pay PRS and PPL about £2.05m a year for Capital London’s music rights.

But how much music is that for?

According to Comparemyradio.com, Capital London played 9,339 tracks in the last 30 days (actually 169 distinct tracks). So based on 365 days in a year, that means that annually the station plays 113,625 tracks.

That means that each time it plays a single track, it is on average costing the station £18.04 to play it.

But while that’s massively better than Pandora, each play on Capital London obviously reaches quite a lot of people.

How many? Well it obviously varies throughout the day, but we’ll use an average.

At any given point during the week – Mon-Sun – there are an average of 64,798 people are listening to Capital London (Source: RAJAR Q3 2014. Note that there are various ways of calculating this – I’m using published numbers to get to this estimate which will be close to other methods).

That means that for each person listening to a play of a track, Capital London is paying 0.028p. Based on $1 = £0.63 as a current exchange rate, that means that we need to compare 0.027p for Capital, with 0.0046p for Pandora.

In other words, Capital London is paying about six times (6.01) what Pandora is to play the same song.

Now there is one massive caveat to this ratio. And that is that is the Aloe Blacc example from Wired only lists his songwriting royalties; he’s excluded his royalties as a performing artist. The New York Times suggests that these would be higher. But in the UK, as I’ve shown, they’re about even.

Applying an even split to the Pandora fees (so assuming it was more like $24,000 that Pandora was paying out for the song) would still see Capital London paying about three times what Pandora is.

The other thing to note is that the artist is not the only person getting paid by a streaming service. Depending on agreements made with record companies and publishing groups, a variety of people could be taking some quite sizeable cuts of revenues. An artist might have had a sizeable advance for example which is being paid back out revenues earned. Sadly, dependent on the deal the artist struck with their record company, what they’re getting from a streaming service might not be the whole story.

I would say though that I dislike stories that give the cumlative figure for payments made so far. Daniel Ek, for example, said the other day that Spotify had paid out $2bn since 2008. But that’s really not very helpful. A 2013 figure is much more useful.

Once again, for this estimation, I’ve chosen a very successful station in Capital London. A smaller station would pay much less. But then it’d be heard by fewer people too. Without some accurate revenue figures for a smaller station, it’s hard to calculate an equivalent ratio.

Anyone want to volunteer their numbers?

Some other interesting things fall out of these calculations. Capital, as I’ve mentioned, has a pretty tightly defined playlist with just 169 tracks in the last 30 days (compared with 3,665 for Radio 1 over the equivalent time). But that does mean that some artists do very well out of Capital.

For example, Sam Smith has 522 plays for two songs over the last 30 days. That means that he’s singularly responsible for 5.6% of all Capital’s current musical output.

If that popularity were to be maintained across a year (and that’s a big “if”), then Smith would be collecting about £115,000 from plays of Capital London alone! (Obviously what Smith himself gets depends heavily on who has the publishing rights, and who wrote the songs, as well as his performance rights). Multiply that up across the Capital and Heart networks which have both strongly supported him, and Global Radio alone is giving him a very nice income. And since Comparemyradio only lists the top 40 most played tracks by a station, this calculation excludes any back catalogue tracks that are getting slightly less exposure on-air.

Just one month’s airplay of Sam Smith is the equivalent of 33.8m plays (522 plays x 64,798 people). Again, that’s one artist with two tracks on one big London station. Contrast that with 168m plays for Aloe Blacc’s track throughout the entirety of the US! Even though I’m comparing two tracks in the UK with one in the US, I think that figure shows radio’s true strength. An artist that is strongly supported by radio (commercial and BBC) will have their track heard many more times than even a really popular streaming service can currently deliver.

In unrelated news, I note that Sam Smith is playing at this year’s Jingle Bell Ball this weekend!

Now perhaps I’ve picked a non-representative station in Capital London. It’s a very big commercial station after all. But I think it probably shows that just one station can provide a pretty decent income to one artist on its own. Especially if that artist is played a lot on a tightly formatted station with a fairly limited playlist.

And while Taylor Swift might have fallen out with Spotify, I note that she’s also happy to show up to Capital’s Jingle Bell Ball – because it probably makes more financial sense.

A few codas: Some of the figures will have changed between me running these numbers, and you clicking on some of the links – Comparemyradio updates daily, and I’ve been working on this piece for a while now. But hopefully the story remains broadly accurate. And as I repeatedly mentioned, there’s a big “if” surrounding the real revenue that Capital London earns Global.

And yes, I know that Spotify pays more than some of these values. But Spotify allows users to choose what tracks they hear. Pandora is a much more restrictive “radio”-style service.

I’ve created a Google Sheet with all my calculations.

Note: These are my views, and don’t represent those of anybody else – particularly any employer, past or present. Figures are illustrative and may well be wrong. E&OE. Your mileage may vary. Your home may be at risk…

These kinds of numbers can be calculated in a number of ways. Please drop me a line below if you think I’ve done anything wildly wrong!

#radiodetritus

This week is my final week in One Golden Square. More about that anon.

However, one of those things you have to do when you leave, is have a bit of a clear out. One way or another, I’ve accumulated quite a pile of “stuff” over the years. My already cluttered flat has a pile of old Virgin Radio photographs. And a browse through my YouTube channel will reveal a load of old Virgin Radio adverts scraped from a variety of sources.

As well as Virgin Radio and Absolute Radio material, there’s also a pile of Capital bits and pieces. Not because I’ve ever worked there – I haven’t – but because when Virgin was being set-up, copying the Capital model was probably the sensible thing to do.

Anyway, today I posted a pile of stuff on Twitter with the hashtag #radiodetritus, and I thought it’d be nice to repost it all here: